GENERAL ELECTION 2019 results have seen the Conservative Party scoop an overwhelming majority. What does the Conservatives’ victory mean for the population of the UK’s personal finances?
Boris Johnson’s Conservative Party has secured a majority in the General Election 2019. The Conservative party has scooped 365 seats, having needed 326 for a majority.
Following the results, Kay Ingram, Director of Public Policy at LEBC, has shared some insight into what the Conservative Party victory may mean in terms of personal finances.
General Election results 2019: Taxation
The Chartered Financial Planner said: “The Conservatives offered few changes in personal taxation and pledged not to increase income tax, VAT or National Insurance.
“Because the Opposition parties were all endorsing tax increases the Conservatives did not need to offer tax breaks in order to differentiate their offer. The one tax cut promised was a cut in National Insurance by raising the earnings level at which employees have to pay National Insurance from £8,632 to £9,500.
“This will save £100 per year. The ambition is to continue to increase this threshold to £12,500, in line with the income tax free allowance over the next five years.”
General Election results 2019: Lower Earners
“If the Conservatives want to keep the seats they have won in the Midlands and North it is likely that future tax cuts will concentrate on taking more people out of the tax and National Insurance thresholds,” said Ms Ingram.
“The Conservatives have also promised to look at the anomaly which means that many lower earners earning below £12,500, who pay into their workplace pensions via the net pay method, do not benefit from the 20 percent tax relief available to boost their pension savings.”
General Election results 2019: Marriage Allowance
Ms Ingram continued: “This will continue to be available and would have been abolished by the Opposition parties. The allowance which enables a non-tax-paying spouse or civil partner to transfer 10 percent of their tax-free allowance to their partner if he or she has an income of less than £50,000.
“This is worth £250 per year and can be backdated for four years so could be worth over £1,000 immediately. 3.9million couples are eligible for this tax perk but currently only half claimed.”
General Election results 2019: Capital Gains Tax
“No change here which will be a relief for second home owners, buy to let landlords and those who have shares or other investments not in a tax exempt Individual Savings or pensions wrapper. The first £12,000 of any gain will remain exempt,” said Ms Ingram.
“The tax rate applying will then be 10 percent to 20 percent for basic and higher rate taxpayers with 18 percent and 28 percent applying to property sales which are not a main residence.
“The Opposition parties would have stopped these allowances and increased the tax rates to up to 50 percent.
“While the Conservatives have not announced any changes, this tax was notably not included in the list of income tax, National Insurance, and VAT which will be frozen. If the country’s finances get tighter, there is the possibility of this tax increasing.
“Those with assets subject to capital gains should utilise the annual exempt allowance of £12,000 on a regular basis, so that gains can be realised on an ongoing annual basis tax free. It is also advisable to use the tax – exempt Individual Savings Account in which £20,000 of investments can be sheltered each year so that no tax is then payable on the income or gains arising from them.”
General Election results 2019: Inheritance Tax
The financial planner said: “The Conservatives are not committed to making this tax one which affects fewer taxpayers and from April couples who are homeowners will be able to pass on £1million from their estate tax free to their children.
“However, the Conservatives are committed to reviewing tax on lifetime gifts and a report produced earlier in the year by the Office of Tax Simplification (OTS) has proposed changing the time frame over which lifetime gifts remain in the donor’s estate from seven years to five.
“The OTS would however abolish the tapering of tax by 20 percent per year after the first three years, so that the five-year point would create a cliff edge before which full 40 percent tax would apply and after which no tax would be payable.
“It also recommends combining several allowances which make certain lifetime gifts exempt from tax subject to one annual allowance. The manifesto did not indicate which of these recommendations, if any, would be adopted.
“Those wanting to help family members with lifetime gifts may be well advised to consider ways in which they can make exempt gifts now. For example, gifts made out of surplus income on a regular basis are exempt, with no seven-year waiting period. Everyone can gift up to £3000 per year as one off gifts which are exempt.”
General Election results 2019: Income Tax and SDLT
Express.co.uk also asked a tax partner about whether any changes to Income Tax would be expected in the event of a Conservative win.
Matthew Thorpe, partner at national accountancy firm Haines Watts, Essex, said: “The Conservatives, about tax cuts and lowering the tax burden on individuals, have speculated much.
“There have been suggestions of increasing the basic rate income tax threshold to £80,000 from £50,000 over a set period of time.
“There has been talk of lowering the top rate of Stamp Duty Land Tax and even making property up to £500,000 exempt from SDLT altogether in certain cases.
“Unfortunately, little actually made it into the costing document. The key changes that DID make it in to the costing document were an increase to £9,500 in the National Insurance threshold, benefitting most workers (albeit in a minimal way), removal of VAT on female sanitary products and special incentives for employers to help ex-service men and women into employment after leaving the forces.
“Nothing groundbreaking but a continuation of the policy to take more people out of tax altogether, extension of basic rate bands and general preservation of many existing reliefs and allowances seems to be the core of the Conservatives plan on Income Tax.”
From Stamp Duty Land Tax to the housing market, what does the Conservatives’ win mean in terms of property?
General Election results 2019: Self-employed workers
Mike Parkes, Technical Director at GoSimpleTax, a self-assessment tax software, commented on what the result could mean for self-employed workers.
He said: “The five million self-employed workers in the UK are a huge part of the world of work, adding £305bn to our economy each year. These people account for around 15 percent of our total working population and this number continuing to rise.
“Under the Conservatives’ leadership, we’ve looked at what this might mean for self-employed people if the manifesto promises are upheld:
- The Conservatives pledged to simplify the tax system and make it fairer, and for those who are self-employed, there’s not a great deal of obvious changes
- Their so-called a “triple lock” on taxes said exactly that with no movement on rates of income tax, National Insurance or VAT
- Increasing the Employment Allowance for small businesses could provide a boost for some.
“The party’s pledge of tackling late payments should help support to those who are self-employed in dealing with clients who drag their feet on settling invoices, which should help with cashflow planning.
“In the short term certainly the conservative win gives some stability to sole traders in terms of their tax liabilities. It will be interesting to see if during the next budget HMRC will be allowed to now push ahead with Making Tax Digital for Business and move from annual tax return submissions to quarterly real time submissions.”
The Conservatives offered few changes in personal taxation and pledged not to increase income tax, VAT or national insurance.